By: Adam Fischbaum of Street Authority
Once heralded as the bridge to an oil-free energy future, natural gas seems to have been relegated to stepchild status in the hierarchy of carbon fuels. Why?
It's cheap, clean, efficient and plentiful. That's part of the problem. The Energy Information Administration (EIA), estimate that there are 388.8 trillion (yes… trillion) cubic feet of proven natural gas reserves in the United States. That's a lot of product to be pumped along with the 20+ trillion cubic feet of dry natural gas we pump annually.
And we keep discovering more. Take a peek at a 20-year study of the spot price.
After a couple of flirts with ridiculous prices, we're pretty much back to where we started when I still had hair and wore size 32 jeans.
The other challenge is lack of industry consolidation. The top 10 U.S. natural gas producers control 31% of the market. That's a decent number. But compare that to the top 10 petroleum producers who tap 52% of the market. Thin margins due to low prices don't get companies excited about acquisitions.
So with prices in the toilet and lack of merger activity, can investors make any money with natural gas? The answer is "yes". I've found two companies that are thriving despite challenging sector fundamentals. Continue reading "2 Strong Plays In A Struggling Natural Gas Market"